Achi news desk-
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Barry Penner, chairman of the Energy Futures Initiative, at a waste-to-energy plant in Copenhagen this month
Eight years ago, Mark Jaccard, a sustainable energy economist at Simon Fraser University, co-authored a paper that warned of the “serious political consequences” that would be faced by a federal government that chose to rely entirely or mostly on carbon taxes for fuel. climate action strategy.
To meet federal emissions targets mostly on its own, a national carbon tax would need to start at $30 per metric ton of carbon dioxide emissions and increase to $200 per ton by 2030, argued a 2016 paper titled, Is it Win -Win Possible?
“It is highly unlikely that our political leaders will implement such a price, given the serious political consequences,” the paper said.
But Prime Minister Justin Trudeau’s government implemented a national carbon tax as a major policy tool. And now, he faces the political consequences of that choice.
Recent polls suggest that while British Columbians support climate action policies, that support decreases the more those policies cost them.
According to Research Co., 70 percent of British Columbians say they support the federal government’s net-zero ambitions, but that level of support drops to just 49 percent if average energy costs increase by 20 percent . Support for federal net-zero policies drops to just 40 percent if energy costs rise by 30 percent.
The federal carbon tax, which started in 2019 at $20 per metric tonne of emissions, is now at least $80 per tonne. It is expected to rise more than 160 percent to reach $170 a tonne by 2030.
On April 1, the carbon tax in BC increased from $65 per metric ton of carbon dioxide to $80 per metric ton, bringing the carbon tax paid on gasoline to about $0.18 per liter.
Now that carbon tax increases are becoming costly enough to have the intended effect of keeping people from using fossil fuels, inflation-weary Canadians are starting to rebel against them.
And as elections approach in BC in October, and next year in Ottawa, governing parties will need to re-evaluate carbon taxes or risk losing to politicians who promise to eliminate them.
Federal Conservative leader Pierre Poilievre has made getting rid of the federal carbon tax a top election promise, and in BC, John Rustad, leader of the BC Conservative Party, has similarly promised to cancel the BC carbon tax.
Kevin Falcon, meanwhile, said the BC United government would eliminate the provincial motor fuel tax on gasoline, and exempt home heating fuels (natural gas and heating oil) from the carbon tax.
“In a democratic system like Canada, politicians cannot get too far ahead of their voters on issues,” said Barry Penner, chair of the Energy Futures Initiative, BC’s new energy policy think tank. “And if the voters decide that various forms of climate action are too expensive or don’t work well, there is a real threat that climate action policies will be rolled back.”
Penner served as BC’s environment minister when the Gordon Campbell BC Liberal government introduced BC’s climate action plan, which included a revenue-neutral, historic, economy-wide carbon tax. Originally, it was expected to rise by $5 per metric ton until it reached $30 in 2012.
Today, BC’s carbon tax is accompanied by other climate-focused policies that carry their own costs—like the BC government’s currently legislated zero-emissions vehicle mandate, which will require for car dealers to have electric or hydrogen fuel cell cars and trucks account for 90. per cent of total light vehicle sales by 2030, and 100 per cent by 2035.
An effective carbon tax should not require other “heavy-handed” policies, Penner said.
“If you stood behind the carbon tax as a market mechanism, you would think that consumers will make that decision on their own without the heavy hand of government limiting their choices,” he said. Penner.
“The government now does both – they increase the carbon tax and limit your choice and prescribe what technology you have to choose. I think, collectively, that helps contribute to a backlash from people who don’t like the government telling them what to do.
“I believe that governments must be prepared to adjust their timelines and possibly their policies because public support for climate action is waxing and waning.”
In an open letter to the federal government, hundreds of Canadian economists and academics defended Canada’s carbon tax and urged the Trudeau government to stick to its guns. The letter opposes the argument that carbon taxes have not been effective in reducing greenhouse gas (GHG) emissions.
“Since the federal carbon pricing took effect in 2019, Canada’s greenhouse gas emissions have fallen by nearly eight percent, despite other policies in place,” the letter says. Emissions must fall between 32 per cent and 37 per cent by 2030.
The letter refers to a study by the Canadian Climate Institute (CIC) which shows that federal and provincial carbon prices are expected to account for almost half of Canada’s emissions reductions. Interestingly, though, most of the heavy lifting comes from industrial carbon pricing for heavy industry, and not from consumer carbon taxes on fuel.
If the carbon tax were scrapped in Canada, it would still be possible to have effective climate action policies, Jaccard said, although he added that politicians who promise to “get the tax” need to identify what other policies the they would implement them.
Apart from saying he would support nuclear power and carbon capture and storage, Poilievre has not indicated what other climate action policies a Conservative government might maintain or implement.
“If a politician promises to kill carbon taxes but won’t tell you what they’ll do instead, you should assume they’re not sincere on the climate,” Jaccard told BIV. “For example, carbon pricing is not replaced by innovation. Innovation is the result of policy, not policy.”
When BC first introduced a carbon tax in 2008, it was revenue neutral, but revenue neutrality was eventually abandoned. Penner said he believes there could be more support for carbon taxes if people saw other taxes — such as income taxes — going down by levels that are proportional to an increase in the carbon tax.
“I think it’s a strategic mistake to break away from revenue neutrality,” Jaccard said.
Ken Peacock, chief economist of the British Columbia Business Council (BCBC), agrees.
“Definitely part of the problem is that they have abandoned revenue neutrality,” he said. “If they were really interested in reducing emissions, while still fostering investment and making business viable, they would provide some offsetting tax relief.”
It is worth noting that if governments decide to rethink some of their climate action policies, one option might be to maintain carbon prices for industry at least—the so-called large emitters trading system. Alberta has had a variation of this in place since 2007. In BC, it’s called an output-based pricing system.
In a recent paper, the CCI wrote that of all the major climate action tools adopted by the federal government, major emitter trading systems are the most effective in avoiding greenhouse gas emissions.
By 2030, the large emitters trading system would account for 23 percent to 39 percent of emissions avoided from all federal policies implemented to date, according to the CCI report. That compares to just eight percent to nine percent for the “fuel charge” paid by consumers who buy gasoline and diesel.
The second largest reduction in emissions would come from an emissions cap on oil and gas production. Methane reduction regulations would account for the third largest reduction.
“We know that the current package works, and of the current package, large emitters trading systems are by far the single most effective policy,” said CCI senior researcher Ross Linden-Fraser.
“That makes that policy really important. If governments are to change the policies they rely on, they will need to find alternatives that fill any gaps created by missing policies.”
Jaccard’s paper eight years ago suggested that Canada could implement effective climate action policies without having to rely on carbon taxes as a policy cornerstone.
“We must have at least one of these mandatory policies to ensure emissions effectiveness. But it doesn’t have to be carbon pricing,” the paper argued.
Examples of mandatory federal policies include a separate zero-emission vehicle standard, a low-carbon fuel standard and sector-specific performance standards for an industry that specify a decreasing percentage emission intensity.
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